Millions of financial transactions occur every day across the globe. A large portion of these financial transactions, occurring in the form of a cash or credit card purchase, involve an exchange of products or services for money. For example, a financial transaction might include purchasing one or more products such as the latest designer wear, or the newest compact disk recording, or simply buying a hotdog at the local food stand. Other times a financial transaction might include purchasing a service such as dry cleaning, taxi transportation, or a car wash. Of course, these examples provide just a few types of products or services available, but one can imagine the number of financial transactions involving products or services that occur every day. Furthermore, there are other types of financial transactions, such as a withdrawal or transfer of money, purchasing or trading of stocks and funds, and so on. Because so many financial transactions occur each day, it is no surprise that attempts have been made to optimize and simplify the financial transaction process. Unfortunately, current methods and systems for use in a financial transaction still leave the process an undesirable one. Before proceeding, it should be understood hereinafter that the term “transaction” is interchangeable with the term “financial transaction” unless otherwise specified.
Presently, most transactions include payment by cash money or credit. Although credit cards may provide advantages over cash, they do not provide an optimum solution. Most people carry a sizeable number of cards such as credit cards, bank or cash cards, identification cards, grocery store cards, gas cards, and so on. Carrying multiple cards is often bulky and cumbersome, which is both inconvenient and undesirable to the person carrying them. Important information such as a credit card number, expiration date, and the authorized user's name and signature are all located on the surface of the card. This leaves the authorized user and their credit vulnerable to thieves or others who might use that information wrongly. For example, by simply using this important information and forging the user's signature, one can access and use someone else's credit. Additionally, a criminal may use another card to mimic a user's credit card and steal a user's identity. Thus, credit cards may be problematic when attempting to identify and authenticate a user.
Attempting to address the problems of having multiple credit cards, smart cards and super smart cards (i.e., smart cards with small displays and keypads) were developed. Smart cards and super smart cards are credit card-sized plastic cards (according to the popular ISO standards, they are held to the dimensions of 3.370″×2.125″×0.03″) that contain varying amounts of information in an embedded microchip. Smart cards and super smart cards differ from magnetic stripe credit cards because the amount of information that can be stored is typically greater, and some cards can be reprogrammed to add, delete or rearrange data.
However, current smart cards and super smart cards still retain many of the drawbacks of traditional credit cards. For instance, smart card transactions may require a user's signature and may be still recorded on paper. Similar to credit cards, smart cards may not allow remote exchange of information, and although contactless cards have been developed, each contactless card may still require the user to position the card near the card reader. For example, some cards cannot go beyond 0.25 inches from the card reader. In addition, due to their standard credit-card size, smart cards and super smart cards also lack feature-rich functionality and are therefore limited to few functions. Such limited functionality presents an undesirable solution, as smart cards and super smart cards cannot conveniently replace other electronic devices to provide additional functionality, such as Internet access, email access, organizational programs (e.g., address book, appointment calendars, etc.), database programs, video games, and the like.
Portable electronic user devices, such as personal digital assistants, may also be used for financial transactions. However, such devices, as well as credit cards, smart cards, and super smart cards, may face difficulties when attempting to identify a user device (e.g., portable electronic device or card). For example, due to copying of software programs, current user devices may be unable to identify an original copy of a software program and the user device for which the program was intended. Furthermore, a criminal may steal a user device, or copy a software program and identification information from a user device, in order to access the user's financial assets. Standard authentication mechanisms, such as using a user's signature or serial number identification, may not provide enough security from the most daring and capable criminals.
Accordingly, it is desirable to have an electronic financial transaction system that overcomes the above deficiencies associated with the prior art. This may be achieved by monitoring a security state of a portable electronic device.